A computer company leases rather than sells its computers to consumers for a monthly fee. The company maintains the computers and replaces them as needed. The old computers are either refurbished or recycled. What does this business model represent.

Question

Business

Gauge Robinson

11 December, 05:41

A computer company leases rather than sells its computers to consumers for a monthly fee. The company maintains the computers and replaces them as needed. The old computers are either refurbished or recycled. What does this business model represent.

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Answers (1)

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Krish · Answer 1

The answer is Leasing Business Model.

Explanation:

In the leasing business model, what happens is that rather than being a "Seller" and handing over the ownership of the goods for a price, the "Lessor" (a person/organization that lease goods/assets) hands over the assets for an other party (Lessee) for an agreed monthly amount.

What is beneficial about this model is that the Lessor retains the ownership rights and gets a constant cash flow each month until the useful life of the leased asset remains.

Once the asset is no longer usable, as in this scenario, they can refurbish it or get rid of it completely by selling it!